Unlocking Home Equity with an Opeethypotheek (Equity Release Mortgage)

The key points at a glance

If you own your home, you hold a significant amount of capital. Through an opeethypotheek (equity release mortgage) part or all of that value can be made liquid. Simply put, it becomes possible to turn bricks into cash.

1. What is an opeethypotheek?

An opeethypotheek, also known as a verzilverhypotheek (silver mortgage), is used as a supplement to your income. Whereas an overwaarde hypotheek (equity mortgage) or mortgage increase is often used to withdraw a lump sum, the opeethypotheek is more commonly used to supplement monthly income.

An opeethypotheek can be taken out from approximately the AOW (state pension) age. You take out a loan using your home as collateral. It is similar to an interest-only mortgage in that no repayments are charged.

The interest is added to the total debt so you don't pay it monthly. The total mortgage therefore grows, which is how you are eating into the equity in your home (if the value of the home does not increase). Want to know how much room you have? Calculate your equity quickly and for free online.

2. Experiences with the opeethypotheek: the pros and cons

What are the advantages of an opeethypotheek/verzilverhypotheek?

• The mortgage makes the equity liquid. This gives you more spending room.
• You can use it to pay the mortgage. This reduces your fixed monthly costs, which is ideal if your income is limited.

What are the disadvantages of an opeethypotheek/verzilverhypotheek?

Like any loan, this mortgage comes with risks. It can be a beneficial and smart choice, but you need to be able to account for these risks:

• Risks arise if the value of the home falls. After all, you are eating into part of the equity.
• The interest rate is relatively high because the bank is taking on a risk.
• You pay interest on interest, because the interest is added to your mortgage debt.
• The mortgage has to be repaid at some point. If you are unable to take out a new mortgage to repay the old one, you may have to sell your home.
• If you want to use the equity in your home as an inheritance, this amount will keep getting smaller.

Overall, an opeethypotheek is a complex product and it is important to get good advice.

3. An example of the opeethypotheek

To give you a clearer picture of what it actually involves, here is an example of an opeethypotheek or verzilverhypotheek:

Say your home has been valued at €300,000 and the mortgage has been fully paid off for some time. Your home has a substantial amount of equity and your grandchildren are about to start their studies. You would love to give them some extra financial support during their studies. You have just turned 70 and feel it is time to do something with the equity in your home. An opeethypotheek is the ideal solution here. You can then choose whether you want the amount you wish to receive, say €5,000, in one go or in monthly instalments of, say, €500 per month. If you choose monthly payments, you can repay the total amount plus interest at the end of the payment period.

However, if you decide to move sooner or something else happens that means you can no longer live in your home permanently, the outstanding amount, in this case €5,000, will be deducted from the proceeds of the sale of the home. Now, €5,000 is not a large amount to borrow if you look at the monthly payment, since at €500 per month that would last you 10 months. This is why a larger debt often remains after death or moving. This debt then needs to be repaid within 12 months, for example from the proceeds of the home sale.

Frequently asked questions

What is the opeethypotheek?

With the opeethypotheek you get more spending room. You can withdraw the equity and use this money for things like making your home more sustainable.

Which providers offer the opeethypotheek?

There are only a handful of providers offering the opeethypotheek: Florius, ABN AMRO, Rabobank, SNS Bank and Stekkie.

What is the biggest advantage of the opeethypotheek?

The biggest advantage of the opeethypotheek is that it makes your equity liquid, giving you more spending room.